CVR Partners LP reported full-year net income of $287.8 million on net sales of $835.6 million, up from 2021’s $78.2 million and $532.6 million, respectively. Adjusted EBITDA was $403.2 million, up from $212.7 million.
Fourth-quarter net income was $95.4 million on sales of $212.2 million, up from the year-ago $61.5 million and $188.9 million, respectively. Adjusted EBITDA was $122.3 million, up from $92.8 million.
“CVR Partners reported strong results for the full-year 2022 despite planned turnarounds at both nitrogen fertilizer production facilities,” said Mark Pytosh, CEO of CVR Partners’ general partner. “After the successful completion of the turnarounds, we have achieved record monthly production rates at both facilities.” Consolidated fourth-quarter ammonia plant utilization was 96%. CVR expects 95-100% ammonia utilization rates at both of its plants in 2023.
While fourth-quarter sales volumes were down due to the third-quarter turnarounds, prices were up 31% and 30% for UAN and ammonia, respectively, versus the year-ago quarter. Full-year UAN prices were up 84% and ammonia 88%.
Pytosh told analysts that the fall harvest was completed on time, which allowed farmers to get into the field for an early fall ammonia application. “In the third and fourth quarters we experienced strong demand in the US for nitrogen fertilizer due to added demand from Europe as a result of the shut-in production capacity. Several US and Trinidad producers were exporting nitrogen fertilizer to meet the supply shortfall in Europe, which caused supply tightness in the US. Pricing was strong in the late third quarter and the fourth quarter, allowing us to take advantage of those market conditions to sell our fourth-quarter production and more than half of our first-quarter production.
“Grain prices are near 10-year highs and planted corn acres are expected to increase by 3-5% for the spring 2023 planting season, driving strong demand for nitrogen fertilizer,” he added. “With no planned turnarounds until fall 2024 and the strengthening of our balance sheet completed earlier in 2022, the partnership will continue to focus on maintaining financial flexibility and generating free cash flow.”
The company announced that the Board declared a fourth-quarter 2022 cash distribution of $10.50 per common unit.
Pytosh indicated to analysts possible blue ammonia implications for the East Dubuque plant. He said the company is continuing to evaluate future options, as several developers are pursuing sequestration projects near the plant.
In addition, he said the company is doing more to evaluate brownfield development at both plants that could be attractive targeted capacity increases to the company’s existing footprint. However, he said if eventually approved by the Board, they would likely take several years to complete.
CVR said it completed a 4Q tax credit transaction in January with initial cash proceeds of $18 million, which could potentially add to cash available for distribution in the first quarter. It expects to receive additional proceeds of up to $60 million over the next seven years related to 4Q tax credits as certain conditions are met.
As for the repurchase of common units, for 2022 and 2021, the company repurchased 111,695 and 24,378 of its common units at a cost of $12.4 million and $528,729, respectively. The average price was $110.98 and $21.69, respectively. As of Dec. 31, 2022, the partnership had a nominal authorized amount remaining under the repurchase program. On Feb. 22, 2022, it redeemed the remaining $65 million outstanding balance of the 9.25% Senior Secured Notes, due June 2023 at par, plus accrued and unpaid interest.
| Sales (000 st) | 4Q-22 | 4Q-21 | 2022 | 2021 |
| Ammonia | 77 | 105 | 195 | 269 |
| UAN | 261 | 265 | 1,144 | 1,196 |
| Plant Gate Price $/st | 4Q-22 | 4Q-21 | 2022 | 2021 |
| Ammonia | 967 | 745 | 1,024 | 554 |
| UAN | 455 | 347 | 486 | 264 |
| Production (000 st) | 4Q-22 | 4Q-21 | 2022 | 2021 |
| Ammonia – gross | 210 | 197 | 703 | 807 |
| Ammonia – net | 75 | 70 | 213 | 275 |
| UAN | 308 | 286 | 1,140 | 1,208 |
| Feedstock | 4Q-22 | 4Q-21 | 2022 | 2021 |
| Petroleum Coke | 53.36 | 47.96 | 52.88 | 44.69 |
| Natural Gas ($/mmBtu) | 6.68 | 5.43 | 6.66 | 3.95 |